We have
posted previously about the case of EMI Group Ltd v
O&H Q1 Ltd, in which the court was asked to decide whether a
tenant can assign its tenancy to its guarantor. In this case,
EMI Group were the guarantor of original tenant HMV, and were
arguing that the lease had been validly assigned to it by HMV.
Somewhat controversially in the EMI case, the deputy judge
decided that such an assignment could not happen, as it would
frustrate the purpose of the Landlord and Tenant (Covenants) Act
1995 which, fundamentally, was to release the tenant and its
guarantor on an authorised assignment of the lease ("the
Act").
The problem is that this interpretation of the Act goes against
the concept of freedom of contract. Why should a tenant be denied
the ability to assign a lease to a company that has guaranteed its
obligations, if in all other respects it is an acceptable assignee
to the Landlord?
